How can a rogue trader pay a $6-billion fine? Ask McArdle

If markets move on investor psychology, and we want markets to rise, why can’t we all just think positive?

When I was a child, I was champion of the marble pitch. Each day I would arrive at school, clutching my Crown Royal bag of oxbloods and aggies, ready to both compete and barter my arsenal for better stock. And as my wee comrades and I became increasingly excited about our onionskins and ollies, the values of our marbles rose, from nickels to quarters to doubloons. That is, until the weasel MacGregor—my lifelong nemesis in industry and romance—questioned why we were paying such high prices for rocks. Oh, the man is a spoilsport. My point? MacGregor is a villain. Perhaps less important, markets may be sustained on positive thoughts for a period of time but something will inevitably ground them. As Mike Moffatt, economics professor at the Richard Ivey School of Business, explained to me: “Self-fulfilling prophecies play a large role in economics. If we all believe that the Canadian dollar will rise in value, we’ll start to buy up the Canadian dollar, which will cause it to…rise in value.” But if good wishes are the only thing sustaining a market, the bubble will eventually pop. “The belief that house prices had nowhere to go but up helped fuel a real-estate boom in the U.S.,” he says. “But once it became clear the price rise wasn’t based on fundamentals, prices came crashing back to earth.” Even if buyers and sellers alike became locked in a long-term, unshakable delusion, some bubble-bursting MacGregor will inevitably surface. Like, for example, the inability to pay your gigantic mortgage.

How can one rogue trader pay a $6-billion fine?

You refer, of course, to Jérôme Kerviel, the former Société Générale trader convicted by a Paris court in 2010 of making €50-billion (about $63-billion) in unauthorized transactions. Having lost an appeal last month, the Frenchman now faces three years in prison and must repay the €4.9-billion (or $6.3-billion and significant change) lost by the company. As often happens when confronted with an elephantine number, journalists giddily seek comparators to explain the size of the fine. Reuters calculated the penalty to be equivalent to the cost of 20 double-decker Airbuses, 16% of Société Générale’s market value or the GDP of Monaco. The Independent noted that Kerviel, who now works for a computer firm, could repay the fine in 300,000 years if he handed over his entire after-tax income. Which is all one really needs to know: the rogue will never repay his debt. In this respect, he is not dissimilar to Canadians facing far smaller fines. The Ontario Securities Commission, for example, has collected 3.1% of the fines levied after contested hearings held between 2005 and June 2012 (the OSC seeks retribution through stocks and property, but has not yet garnisheed wages). Justice for Kerviel would take an epoch. Sadly, he is immoral, not immortal.

My friend received an annoying e-mail from his boss. After adding a nasty comment, he accidentally hit Reply. His boss was in a meeting, so my pal snuck over and deleted the e-mail before it was read. Was that the right call?

No. Remind your friend that life is not a Molière play (If the reference would be lost, substitute “an episode of Frasier.”) Sending the e-mail earns a lashing; getting caught fiddling with a superior’s computer demands the firing squad.

I don’t genuinely care how or when i get the Letters in the Mail. Every time it arrives, it feels like a letter should be. It’s suddenly there in my mail box just one day. A wonderful, tangible surprise. I am for you doing whatever you want when you send it. Mix it up for the individuals who help get it sent out. Include crumbs from your lunch. Coffee stains. Whatever. Keep the tedious character of getting letters out to a minimum by doing whatever you feel like that day. The arrival with the letter and the words from the author inside are what matters. Personally, what I like greatest about The Rumpus is that I never understand what I’ll read through that day. Or if there is not one that day, maybe it’s because Stephen couldn’t obtain anything to say or there was way too much going on.